Disqualification of Counsel in International Commercial Arbitration

Transcription

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©2011. YAR - Young Arbitration Review • All rights reserved
1 • YAR • APRIL 10, 2014
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YAR
YOUNG ARBITRATION REVIEW
Under40 International Arbitration Review
www.yar.com.pt
[INTRODUCTORY NOTE - THE ROLE AND SUPERVISION OF PRIVATE ARBITRATORS IN INTERNATIONAL TRADE AND
INVESTMENT DISPUTE RESOLUTION] by Jan H Dalhuisen • [BITS, BATS AND BUTS: REFLECTIONS ON INTERNATIONAL
DISPUTE RESOLUTION] by Gary Born • [DEALING WITH THE “BUTs” OF “BATs” WITHIN THE PORTUGUESE JURISDICTION] by
Duarte Gorjão Henriques • [CALIFORNIA MUST BECOME MORE FAVORABLE TO INTERNATIONAL COMMERCIAL ARBITRATION:
An article on why it has not, how it can change so that it is, and why it should] by Giorgio Sassine • [ARBITRATION IN CHINA: ARE THERE
ANY LOCAL DIFFERENCES? THE VIEW FROM ABROAD] by Sergei Gorbylev • [HIGH COURT OF IRELAND REITERATES PROARBITRATION POSITION] by Arran Dowling-Hussey and Derek Dunne • [DISQUALIFICATION OF COUNSEL IN INTERNATIONAL
COMMERCIAL ARBITRATION – A NEW ANSWER TO CONFLICT OF INTEREST?] by Aleksandrs Fillers • [BRIEF ANALYSIS OF THE
RES JUDICATA EFFECTS OF ARBITRAL AWARDS WITH EMPHASIS ON ITS PARTICULARITIES VIS-À-VIS THE TRADITIONAL RES
JUDICATA EFFECTS OF A COURT DECISION] by Carla Góis Coelho • [THREE DAYS OBSERVING THE 9TH ICC INTERNATIONAL
MEDIATION COMPETITION] by Thomas Gaultier
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©2011. YAR - Young Arbitration Review • All rights reserved.
2 • YAR • APRIL 10, 2014
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EDITION 13 • APRIL 2014
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AUTHORS
Jan H Dalhuisen
Gary Born
Duarte Gorjão Henriques
Giorgio Sassine
Sergei Gorbylev
Arran Dowling-Hussey Derek Dunne
Aleksandrs Fillers
Carla Góis Coelho
Thomas Gaultier
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3 • YAR • APRIL 10, 2014
[ARTICLES]
1 - INTRODUCTORY NOTE - THE ROLE AND SUPERVISION
OF PRIVATE ARBITRATORS IN INTERNATIONAL TRADE
AND INVESTMENT DISPUTE RESOLUTION,
by Jan H Dalhuisen
2 - BITS, BATS AND BUTS: REFLECTIONS ON INTERNATIONAL
DISPUTE RESOLUTION,
by Gary Born
3 - DEALING WITH THE “BUTs” OF “BATs” WITHIN
THE PORTUGUESE JURISDICTION,
by Duarte Gorjão Henriques
4 - CALIFORNIA MUST BECOME MORE FAVORABLE
TO INTERNATIONAL COMMERCIAL ARBITRATION:
An article on why it has not, how it can change
so that it is, and why it should,
by Giorgio Sassine
5 - ARBITRATION IN CHINA: ARE THERE ANY LOCAL DIFFERENCES?
THE VIEW FROM ABROAD,
by Sergei Gorbylev
6 - HIGH COURT OF IRELAND REITERATES
PRO-ARBITRATION POSITION,
by Arran Dowling-Hussey and Derek Dunne
7 - DISQUALIFICATION OF COUNSEL IN INTERNATIONAL COMMERCIAL ARBITRATION – A NEW ANSWER TO CONFLICT OF INTEREST?
by Aleksandrs Fillers
8 - BRIEF ANALYSIS OF THE RES JUDICATA EFFECTS OF ARBITRAL
AWARDS WITH EMPHASIS ON ITS PARTICULARITIES VIS-À-VIS THE
TRADITIONAL RES JUDICATA EFFECTS OF A COURT DECISION,
by Carla Góis Coelho
9 - THREE DAYS OBSERVING THE 9TH ICC INTERNATIONAL
MEDIATION COMPETITION,
by Thomas Gaultier
4 • YAR • APRIL 10, 2014
DISQUALIFICATION OF COUNSEL
IN INTERNATIONAL COMMERCIAL
ARBITRATION – A NEW ANSWER TO
CONFLICT OF INTEREST?
By Aleksandrs Fillers
1. Introduction
disqualification of counsel. However, the issue remains hardly
analyzed. Both authors and tribunals have never tried to give a
The
impartiality
and
independence
of
an arbitrator is a fundamental principle of international
comprehensive analysis of the issue, evaluating the arguments
for and against such disqualification.
arbitration. This principle is compromised if an arbitrator
1
has a conflict of interest with other participants of arbitration
The purpose of this article is to give such analysis
proceedings. One often occurring type of conflict of interest is
by evaluating the most probable arguments in relation to
that between an arbitrator and a counsel. Traditionally, such
disqualification of counsel in commercial arbitration. The article
conflict was resolved via a challenge of an arbitrator. However,
discusses only the question of a conflict of interest between an
why should a party challenge an arbitrator, if it could challenge
arbitrator and a counsel, there could be other circumstances,
a counsel of the opposite party, thus solving the conflict of
when a party could try to challenge a counsel, e.g., if the latter
interest? Such a solution would avoid procedural delays and
has violated rules of professional ethics, the conclusions of this
expenses related to them.
article cannot be applied to these cases.
The problem with a disqualification of counsel is
The article has a following structure. Firstly, the author
whether a tribunal has a necessary competence to order such
will review the rules of conflict of interest in commercial
disqualification. This question has been asked at least from
arbitration. Secondly, the author will summarize recent
the 1980’s by national courts and arbitral tribunals, but only
developments on disqualification of counsel in investment
recently it has come in the spotlight. In last few years two
arbitration. Thirdly, the author will analyze arguments pro and
investment arbitration tribunals have made decisions about the
contra the disqualification of counsel. Finally, the author will
5 • YAR • APRIL 10, 2014
discuss the circumstances under which the disqualification of
counsel has been posed from at least the 1980’s18, it came
counsel is permissible.
into publicity only after two investment arbitration awards.
In Hrvatska Elektroprivreda DD v The Republic of Slovenia
2. Conflict of interest in international arbitration –
an overview
(ICSID Case Nr. ARB/05/24)19 just before the commencement
of the oral session, the respondent informed the tribunal that a
new counsel would represent the respondent. As it turned out,
It is universally recognized that “the arbitrator must not
this person and the president of the tribunal were members of
be linked to either of the parties and must not have any interest
the same barristers’ chamber. This fact alone was sufficient for
in the outcome of the dispute.” The rules on conflict of interest
the claimant to demand the tribunal to disqualify the counsel,
are contained in national laws. Overall, most jurisdictions
since his presence would create a conflict of interest. The tribunal
regulate the issue in similar manner.
affirmed the challenge.
2
3
Article 12(2) of the UNCITAL Model Law on International
Commercial Arbitration (“Model Law”)
The tribunal found that the parties in an arbitral
provides that an
procedure “as a general rule [...] may seek such representation
arbitrator can be challenged “only if circumstances exist that give
as they see fit”.20 However, the tribunal considered that this
rise to justifiable doubts as to his impartiality or independence,
principle is overridden by the principle of immutability of
or if he does not possess qualifications agreed to by the parties.”
properly constituted tribunal.21 Thus, in cases where a party
Under the Model Law the dismissal is first decided by the tribunal,
is adding a new counsel to its team during a late stage of the
5
but in case the decision is negative it can be reviewed by a court.
proceedings and the presence of the new counsel amounts to
Section 8 of the Swedish arbitration law provides an identical
a conflict of interest, the tribunal is empowered to defend the
procedure. Section 24.1 of the English Arbitration Act delegates
principle of immutability by disqualifying the counsel.22
4
6
the competence to decide the challenge directly to courts,7 with
similar regime working in France.8 The rules are somewhat
In 2010 another investment arbitration case touched upon
different in the US, since the Federal Arbitration Act contains
the challenge of counsel. In The Rompetrol Group NV v Romania
no rules on the disqualification of an arbitrator. However, the
(ICSID Case Nr. ARB/06/3),23 the claimant had added a new
US courts recognize that an arbitrator must be impartial and
counsel after the commencement of the arbitral proceedings. It
independent, even though a challenge against an arbitrator can be
turned out that the newcomer has previously worked in the same
brought only during the recourse against an already made award.
law firm as the arbitrator appointed by the claimant. In this case
None of the acts mentioned above contain any rules concerning
the tribunal rejected a challenge to the counsel.
9
10
the challenge of counsel. From the developed jurisdictions, only
the German Law on Civil Procedure, that, in principle, follows the
In Rompetrol, the tribunal analyzed the reasoning of the
Model Law, contains a mandatory rule that prohibits a tribunal
Hrvatska decision. The tribunal began its analysis by noting that it
from disqualifying counsel.
lacks any express authorization to decide about the disqualification
11
of counsel.24 The tribunal did not consider this omission of
In international arbitration, national acts often play a
authorization as a coincidence, since unlike arbitrators, the counsel
secondary role to arbitration agreements, due to the principle
are by their very nature biased.25 Under such circumstances the
of party autonomy that allows parties to modify default non-
tribunal considered that such disqualification was permitted only
mandatory rules. The most recurrent form of such agreement
under exceptional circumstances.26 However, further on, in a
is by a reference to institutional rules. The most popular sets of
form of obiter dictum, the tribunal noted that even if it possessed
rules of institutional arbitrations permit the disqualification of
the power to disqualify a counsel, the facts of the case were
an arbitrator provided that he/she is biased. The challenge to an
insufficient to justify such conduct.27 To prove this contention,
arbitrator is usually heard by the institution itself.13 However,
the tribunal tried to distinguish its case from that of Hrvatska.
none of these rules speaks about the challenge to a counsel.
For the Rompetrol tribunal, the Hrvatska decision was strongly
12
14
limited to its own peculiar facts. Thus, the tribunal believed that
IBA Guidelines on Party Representation in International
the Hrvatska decision turned around the following facts: 1. the
Arbitration make an exception to this silence in respect of counsel
counsel played only a secondary role in his client’s representation
disqualification. Inspired by the recent developments in case-law
team; and 2. the party making the challenge emphasized that
(that will be discussed in the next section) , Guideline 6 expressly
the disqualification of the counsel “would eliminate the problem
allows the tribunal to disqualify the counsel in case of conflict
entirely”.28 Finally, the tribunal had no doubts that the Hrvatska
of interest with an arbitrator. However, IBA Guidelines have
decision would have been decided differently if the counsel had
contractual nature and cannot empower a tribunal to disqualify
entered the proceeding in an earlier phase. 29
15
16
counsel, if the tribunal lacks such competence according to national
arbitration law.17 Therefore, the question of tribunal’s competence
to disqualify counsel remains within the ambit of arbitration law.
The tribunal in Rompetrol found that none of these
circumstances were present. For this reason the tribunal decided
that even provided it was empowered to disqualify the counsel,
3. Recent cases of disqualification of counsel in
the rights were not to be used in the particular case.
investment arbitration
4. Arguments for and against the disqualification of
Whereas the question whether a tribunal can disqualify
counsel
6 • YAR • APRIL 10, 2014
It
follows
from
the
previous
sections
that
the
above does not preclude a tribunal in international arbitration
disqualification of counsel has become an issue in investment
from disqualifying a counsel. The US courts have evaluated the
arbitration. This naturally leads to a question: should this
conduct of counsel in light of professional rules. In Bidermann
mechanism have its place in the commercial arbitration? In
Indus. Licensing, Inc. v. Avmar N.V., the court emphasized that
the following sections the author will analyze the possible
“the regulation of attorneys, and determinations as to whether
arguments in favor and against the dismissal of counsel by
clients should be deprived of counsel of their choice as a result
tribunals. The author will discuss whether disqualification: A.
of professional responsibilities and ethical obligations, implicate
violates public policy; B. infringes the right to choose counsel;
fundamental public interest and policies which should be reserved
C. is beyond the competence of the arbitral tribunals; D. is
for the courts and should not be subject to arbitration.”33 In that
contrary to institutional scheme of arbitration procedure.
case, the court made a decision based on the nature of the rules
applied by the tribunal. However, in international arbitration
A. Disqualification of counsel – a violation of public
policy
the tribunal does not need to make a reference to the rules of
professional conduct to disqualify a counsel. Instead, a tribunal
could disqualify a counsel who is a cause of a conflict of interest,
A development of the case-law in the US, seemingly,
simply based on its interpretation of arbitration agreement.34 In
causes doubts whether arbitrators are allowed to disqualify
doing so, the tribunal would exercise its “inherent jurisdiction
counsel. In a number of decisions the US courts have decided
to use powers necessary to ensure the fulfillment of the proper
that questions concerning professional ethics of attorneys are
functioning of the tribunal.”35
30
intertwined with the public interest.31 Based on that assumption,
some of the US courts have concluded that a tribunal cannot
Moreover, prohibition to arbitrators to disqualify counsel
decide on attorney ethics and, as a consequence, cannot decide
based on professional rules of conduct is also unjustified, at least
on disqualification of attorneys.
for two reasons. Firstly, such prohibition creates an unjustified
32
discrimination between counsel. In international arbitration
On one hand this practice is understandable. Attorney
parties may be represented by persons lacking registration at
ethics are among the founding values in a democratic society. If
the bar. If tribunals are precluded from disqualifying attorneys,
their violation remains unsanctioned that would undermine the
but not other counsel, it could create a situation when one party
trust in the institution of attorneys. In such case the member
could require the disqualification of a counsel of its opponent,
of society would be afraid to entrust their lives and property
while the other would have been pressured to file a request
to attorneys. On contrary, if the rules of professional conduct
in a court. Secondly, keeping responsibility for disqualification
were to be enforced too rigorously, the attorneys would lack
of counsel with arbitrators avoids parallel proceedings and as
necessary means to help their clients.
consequence provides a cheaper and a faster procedure.
However, the author considers that the practice referred
The author considers that firstly, the US case-law does not
7 • YAR • APRIL 10, 2014
preclude a tribunal to disqualify a counsel, if the disqualification
is not based on professional rules of ethics. However, even
C. Disqualification of counsel - the source of
competence
if these precedents apply to all cases of disqualification of a
counsel, such practice is not justified on a policy level and
should not be followed by other jurisdictions.
As has been established before, the rights to choose
counsel do not prohibit a tribunal from disqualifying the latter.
However, even if the national arbitration law does not prohibit
B. Disqualification as an infringement of the right to
choose a counsel
disqualification of counsel the question remains what is the
source of tribunal’s competence.42
The competence of a tribunal is regulated by the national
All the laws of developed jurisdictions and all the leading
acts and an arbitration agreement. The latter often makes
institutional rules include general provisions empowering
reference to institutional rules. If the applicable law or the
arbitrators “to determine those aspects of procedure that the
arbitration agreement prohibits a disqualification of counsel,
rules are silent on and where there is not an agreement between
then his/her removal will serve as ground for non-recognition
the parties.”43 These open-ended rules could be a ground for
of the award based on the Article V1 (d) of the New York
disqualification of counsel. At the same time, Waincymer has
Convention. Moreover, such award most likely will be annulled
deduced such competence from a principle of due process. For
at the seat, since it would violate the applicable law. As it was
him, “fairness and due process obligations on a tribunal ought to
mentioned before, at the moment such prohibition exists in
be seen as both supporting the right to counsel and the right to
Germany, and possibly in the US.
protect the original independence and impartiality of the tribunal
from a subsequent choice of counsel that would undermine it.”44
At the same time, almost every single national arbitration
In particular, reliance on the due process principle precludes
law and set of institutional rules includes rights of the parties
parties from depriving a tribunal of its powers to disqualify
to freely choose their counsel. It is only reasonable to invoke
counsel, since due process is a mandatory rule.45 The competency
this principle as the pivotal argument against the rights of
to disqualify a counsel could also be deduced from “implied
disqualification.
This however, implies that the principle is
consent based on good faith considerations.”46 Finally, these
absolute. Such mode of reasoning would mean that every other
powers could be based on the principle that precludes abusive
principle of arbitration law is subordinate to the principle of
use of procedural rights. 47
36
choice of counsel. This contention is baseless, if not absurd.
The author considers that is a futile exercise to try to crystalize
A right to choose a counsel “cannot be an unlimited
a single principle or a rule that would justify the competence
Firstly, an abuse of these rights cannot be tolerated. As
to disqualify a counsel. A good faith and efficient procedure is
once stated by Prof. Lauterpacht: “[t]here is no right, however
guaranteed by all the principles and rules mentioned above. All
well established, which could not, in some circumstances, be
these principles and rules, including, the open-ended competency
refused recognition on the ground that it has been abused.” A
rules ought to be seen as a whole system, rather than a bundle of
prevention of abuse is only logical, since “the right to counsel is
contradictory rules. Since the rights to disqualify a counsel are
not an end in itself but merely a means to the end of affording
not provided explicitly, they are always implied, but their main
a party a proper opportunity to present its case.”
In this case
source is the parties’ right to an efficient and good faith procedure,
“[t]he disqualification of counsel is [...] a remedy aimed at
which itself is a part of a due process. It means that these rights
protecting ‘the integrity of ongoing proceedings’ [...].”
have multiple sources, and a tribunal could rely on its open-ended
one.”
37
38
39
40
authority interpreted in the light of the principle of due process,
Secondly, the rights to choose a counsel can come into
good faith and procedural efficiency to disqualify counsel.
conflict with rights to efficient arbitration proceeding. The
authorities recognize that in such cases, the rights to choose
A contrary exercise was performed by McMullan who has
counsel must also be limited. For example, McMullan considers
tried to justify the rights of arbitration tribunal to disqualify a
that an arbitrator could exclude a counsel from the proceedings,
counsel by a complicated legal construction. McMullan points
if the latter “displays behaviour that is seriously disruptive of
out that Article 17 (2)(b) of the Model Law empowers arbitrators
the proceedings [...].”
Waincymer notes that “a party cannot
to make interim measures that order ”a party to take an action
choose counsel who will not be available for a number of years
that would prevent or restrain that party from taking action
and then ask for an adjournment on the basis that it needs a full
that is likely to cause current or imminent harm or prejudice to
opportunity to present its case through the counsel of choice.”
the arbitral process itself.”48 Even though the article in question
These, seemingly self-evident, examples reflect a more general rule
formally applies only to parties and not to their counsel,
that efficiency, under certain circumstances, prevails over a right
McMullan envisages its possible application to the latters by
to choose a counsel.
means of analogy.49 This argument seems redundant. There is
41
no need to based tribunal’s rights of disqualification on narrow
In other words, a right to choose counsel has a well-
legal provisions. Instead, disqualification rights are embedded in
defined purpose - to provide a party with an opportunity
an arbitration agreement itself and are “aimed at protecting ‘the
to present its case. These rights cannot be used abusively.
integrity of ongoing proceedings’ as between the parties.”50 Moreover, even when their use is non-abusive, their scope can
be limited in order to effectuate efficient proceedings.
There is number of arguments against empowering a
8 • YAR • APRIL 10, 2014
tribunal to disqualify counsel. Firstly, it could be possible to rely
claim against a third party; rather it is founded on parties’ rights
on an argument from the contrary, to argue that the national
to demand efficient arbitration proceedings.52 Secondly, it is
laws and institutional rules that provide only a procedure for
reasonable to consider that from the moment a person agrees to
removal of arbitrators, implicitly exclude the rights to disqualify
participate in arbitration proceedings it consents to the power of
counsel. In other words, if legislators or parties were willing to
arbitrators to control its behavior for the benefit of arbitration
allow arbitrators to decide on challenges of counsel, such rights
proceedings.53 Thus, a counsel submits itself to the jurisdiction
would have been expressly provided.
of an arbitration tribunal. Due to these reasons, the position of
the ICC tribunal fails to convince.
However, these arguments can be refuted with ease.
Firstly, as already mentioned tribunals have implied rights to
As, as shown above, there is no clear ground to
assure an efficient and fair arbitral procedure. Secondly, both
eliminate the right to remove counsel. The general principles
legislators and parties lack ability to perceive all the possible
of international arbitration and open-ended provisions of
circumstances and it is for that reason they have empowered
competency should be interpreted in a manner that would
arbitral tribunal to decide on all the questions lacking express
allow such disqualification.
solution in law or agreement. In fact, a regulation through
a general delegation of competence allows a tribunal to find
D. Disqualification of counsel – an institutional role
a solution most appropriate in the light of the particular
circumstances. Thirdly, the argument based on the contrary
The majority of national laws provide that a challenge
is double-sided. An example of a German legislator having
of an arbitrator is within a competence of national court of
explicitly deprived arbitrators of rights to disqualify counsel
the seat. A similar mechanism is incorporated in the majority
leaves nothing but to wonder, whether other legislators and
of institutional rules that provide the institutions with the
arbitral institutions that have not acted similarly could be
competence to decide on the removal of arbitrators. The interest
suspected in an implicit recognition of such rights.
of institutions - keeping good reputation, motivates the latter to
remove partial arbitrators. These mechanisms show that most
Secondly, an ICC tribunal has proposed one more argument
legal systems “[wish] to take the view that a tribunal member
against the rights of arbitrators to disqualify counsel. In one case,
cannot sit in judgment on the impropriety or otherwise of his
an ICC tribunal treated an issue of counsel disqualification as a
or her own relationship”.54
claim against a third party.51 The relevant arbitration agreement,
naturally, did not include counsel among its parties, and this was
The disqualification of counsel, apparently, is in conflict with
a sufficient ground for the tribunal to find a lack of jurisdiction.
this institutional structure.55 If a tribunal has a right to disqualify
The commentators have questioned the reasoning of the ICC
a counsel, then indirectly the arbitrators become empowered
tribunal. Firstly, the question of disqualification is not a separate
to decide on their own conflict of interest. In addition, if such
9 • YAR • APRIL 10, 2014
practices would become a fully-fledged alternative to removal of
behind the scenes”.62 Waincymer considers that “the more the
arbitrators, it could endanger a uniform application of ethical rules
counsel operates behind the scenes, the less the tribunal is
within arbitral institutions, since tribunals could apply ethical
aware of this.”63 Thus, for Waincymer only open representation
rules differently than the secretariats of these institutions.
poses a risk of conflict of interest. The author thinks otherwise.
The mere fact, that a tribunal has removed a counsel does not
However, the author considers that such arguments are
fully remove a risk of such conflict. While removal of arbitrator
insufficient to prove that arbitrators lack rights to disqualify
dissolves all the doubts of bias, since the very decision taker is
counsel. Firstly, national laws and institutional rules are
disqualified, the removal of counsel creates uncertainty as to
prescribing only a mechanism to remove arbitrators. This
his/her role in the proceedings. If arbitrators themselves might
mechanism is based on the principle that arbitrators should never
continue to doubt over the role of the former counsel in the
take decisions about their own conflict of interest. It remains
proceedings, then it is possible that they would still assume, even
questionable, whether the mere recognition of such principle in
if unintentionally, that the counsel is working behind the scenes.
relation to removal of arbitrators is sufficient, without express
This creates uncertainty as to whether the risk bias is removed.
provisions, to preclude arbitrators to take decisions about
disqualification of counsel. Secondly, even though avoidance of
If a party to the proceedings requests a disqualification
conflict of interest is crucial in arbitration, this has not prevented
of counsel, the tribunal has no inherent limitations to refuse
legislators from limiting parties’ rights to request removal of
considering such request. The tribunal must however, be
arbitrators. Thus, rights to have the most impartial arbitration
cautious so that the request does not prejudice the other party’s
can be limited in interest of efficiency. Similarly, there seems no
right to choose a counsel. Therefore, the request must be well-
reason why arbitrators could not be judging their own case, if that
founded and can be satisfied only in the light of exceptional facts
is overall benefiting the efficiency of the procedure. Moreover, if
of the case. In this respect, it is easy to agree with the Rompetrol
institutions or legislators really consider that disqualification of
tribunal that disqualification of counsel is not an alternative for
counsel will be diminishing the impartiality of arbitrators, they
removal of arbitrators64, and it is of utmost importance that this
can always provide express prohibitions for arbitrators to remove
form of removal itself is not used in an abusive manner.
56
counsel in the laws and institutional rules.
57
6. Conclusions
5. When counsel could be disqualified?
The disqualification of counsel in case of conflict of
As was mentioned above, it is universally recognized that
interest is not based on the professional rules of ethics, but on
arbitrators have a wide competence to decide all procedural
the arbitration agreement itself. Therefore, disqualification of
issues not decided by law or agreement even without express
counsel has no prejudice on public policy related to application
authorization. In particular, arbitrators have to ensure an
of these professional rules. Neither does the right to choose
effective arbitration procedure and prevent its abuse.
It is
counsel prevents a tribunal to disqualify the latter, since this
rather simple to imagine a situation where an abuse of procedure
right gives way to considerations of good faith and procedural
requires the disqualification of counsel. If a party knowingly
efficiency. Thus, the question of disqualification of counsel is
adds to its team a counsel having a conflict of interest with a
within the competence of arbitral tribunal.
58
member of a tribunal, the other party will have to challenge
an arbitrator. Such challenge, if successful, could lead to a
It is hard to deny that disqualification of counsel is a
creation of a new tribunal or leave parties with a truncated one.
procedure somewhat difficult to reconcile with the institutional
In theory, a bad faith party could try its luck by adding new
structure of arbitration procedure. The latter is based on the
counsel repeatedly. Moreover, as shown in Hrvatska, the same
principle that arbitrators should not judge their own cases.
problem can appear even if the changes in representation team
However, such contradiction is not sufficient to deny tribunal
are made in good faith. As was discussed in previous sections,
rights of disqualification; rather a tribunal has to weigh all
under such circumstances there are no reasons to doubt that
relevant circumstances to decide whether facts of the case
the disqualification of counsel can be justified.
justify the application of this exceptional remedy.
59
At the same time, “in the normal case where the counsel
It is impossible to enumerate all the possible circumstances
is selected before the tribunal [a challenge] to the tribunal is
justifying the disqualification of a counsel. However, the
clearly sufficient.”
An exception to this rule is those conflicts
author considers that the disqualification is justified, if the
of interest that have appeared already during the proceedings.
counsel has joined the proceedings for the purpose of creating
For example, a counsel of one of the parties, during the
artificial conflict of interest, or if the counsel in question has
proceedings, joins a law firm where one of the arbitrators is
joined proceedings at the late stage. In any case, the tribunal
working. In such case a challenge of the counsel is permissible.
must consider that disqualifying counsel is less efficient than
60
disqualifying an arbitrator.
However, outside these specific cases, the removal of
counsel rarely will be an efficient tool.
Such removal can
prevent a counsel in question from participating in the oral
proceedings and signing documents.61 However, no decision of
tribunal can assure the person in question will not be “acting
Aleksandrs Fillers
10 • YAR • APRIL 10, 2014
1. I am very grateful to Paul Frankenstein for his comments and advices in writing this article. The views expressed and the errors or omissions made are the responsibility
of the author alone. Lew J.M., Mistelis L. A., Kröll S. Comparative International Commercial Arbitration. New York: Kluwer Law International, 2003, p. 256 (Further
–“Lew”); Waincymer J. Reconciling Conflicting Rights in International Arbitration: The Right to Choice of Counsel and the Right to an Independent and Impartial
Tribunal, Arbitration International, 2010, Vol. 26(4), p. 597, 598 (Further – ”Waincymer”).
2. Poudret J-F, Besson S. Comparative Law of International Arbitration. London: Sweet & Maxwell, 2007, p. 346.
3. Ibid.
4. 1985 UNCITRAL Model Law on International Commercial Arbitration with amendments as adopted in 2006. U.N. Doc A/40/17, Annex I and A/61/17, annex I,
adopted by the United Nations Commission on International Trade Law on June 21, 1985 and amended by the United Nations Commission on International Trade Law
on 7 July 2006 Available: http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf [consulted 4.03.2014]. (Further – “Model Law”).
5. Article 13 (3) of the Model law. See also, Böckstiegel K-H, Kröll S.M. et al. (eds), Arbitration in Germany: The Model Law in Practice. New York: Kluwer Law
International 2007, p. 35. (Further – “Böckstiegel”).
6. Section 8 of the Swedish Arbitration Act. Available: http://www.chamber.se/?id=23746 [consulted 4.03.2014]. See also, Heuman L. Arbitration Law of Sweden: Practice
and Procedure. New York: Juris Publishing, 2003, p. 224. (Further – “Heuman”).
7. Section 24 of the English Arbitration Act. Available: http://www.legislation.gov.uk/ukpga/1996/23/section/24 [consulted 4.03.2014].
8. Article 1456 of French Law of Civil Procedure. Available http://www.iaiparis.com/pdf/FRENCH_LAW_ON_ARBITRATION.pdf [consulted 4.03.2014].
9. Born G. B. International Commercial Arbitration. New York: Kluwer Law International, 2009, p. 1568. (Further – “Born”).
10. Ibid., p. 1567.
11. See, Section 1042 of the German Code of Civilprocedure. Available: http://www.dis-arb.de/de/51/materialien/german-arbitration-law-98-id3 [consulted 4.03.2014]; see
also, Böckstiegel, p. 38.
12. Lew, p. 523.
13. See, e.g., Article 15 of the SCC rules; Article 10 of the LCIA rules; Article 14 (1) of the ICC rules.
14. However, this will probably change in future. A sign of this shift - Article 18.6 of the new draft version of the LCIA rules implying a right to disqualify a counsel. See,
LCIA Rules 2014: Revised Draft – 18.02.2014. Available: http://www.lcia.org//media/download.aspx?MediaId=336 [consulted 4.03.2014]. See also, Rau A.S. Arbitrators
Without Powers? Disqualifying Counsel in Arbitral Proceedings. 2014, pp. 9-10. Available: http://ssrn.com/abstract=2403054 [consulted 4.03.2014]
15. See, IBA Guidelines on Party Representation in International Arbitration. Available: http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.
aspx#partyrep [consulted 4.03.2014]. (Further – “IBA Guidelines”)
16. See, Rau A.S. Arbitrators Without Powers? Disqualifying Counsel in Arbitral Proceedings. 2014, p. 11. Available: http://ssrn.com/abstract=2403054 [consulted 4.03.2014].
17. IBA Guidelines, Preamble; Guidelines 1 and 3; Comments to Guidelines 1-3.
18. See, Jacobus J.L., Hefty, A.J., Rohner T. Conflicts of Interest Affecting Counsel In International Arbitrations, Mealey’s International Arbitration Report, August 2005, Vol. 20(8).
19. Hrvatska Elektroprivreda DD v The Republic of Slovenia (ICSID Case Nr. ARB/05/24).
20. Ibid., p. 10.
21. Ibid., p. 11.
22. Ibid., p. 10.
23. The Rompetrol Group NV v Romania (ICSID Case Nr. ARB/06/3). (Further – ”Rompetrol”)
24. Ibid., p. 6.
25. Ibid., p. 8.
26. Ibid., p. 6.
27. Ibid., p. 13.
28. Ibid., pp. 11-12.
29. Rompetrol, p. 12.
30. Brower C.N., Schill S.W. Regulating Counsel Conduct before International Arbitral Tribunals. In: Bekker P.H.F., Dolzer R., Waibel M. Making Transnational Law Work
in the Global Economy: Essays in Honor of Detlev Vagts.Cambridge:University Press, 2010, p. 495 (Further – “Brower”).
31. The most famous precedent is Bidermann Indus. Licensing, Inc. v. Avmar N.V.,N.Y.L.J.,Oct. 26, 1990, p. 23 (N.Y. Sup. Ct.). For more detailed discussion the US case law, see,
Jacobus J.L., Hefty, A.J., Rohner T. Conflicts of Interest Affecting Counsel In International Arbitrations, Mealey’s International Arbitration Report, August 2005, Vol. 20(8).
32. The practice of the US courts in this respect is not unanimous, some court have recognized that the rights to disqualify counsel remains with tribunals. A more detailed
analysis of the US case-law see, Jacobus J.L., Rohner T. Conflicts of Interest Affecting Counsel In International Arbitrations, Mealey’s International Arbitration Report,
August 2005,Vol. 20 (8).
33. Bidermann Indus. Licensing, Inc. v. Avmar N.V.,N.Y.L.J.Oct. 26, 1990, p. 23 (N.Y. Sup. Ct.).
34. Brower, p. 495.
35. McMullan S. Holding Counsel To Account in International Arbitration, Leiden Journal of International Law, June 2011, Vol. 24(2), p. 491, 508.
36. Cf., Rompetrol, p. 6. See also, a partial award of 1997 in ICC case 8879, where the tribunal also considered that the disqualification of counsel is against the principle
of his free choice. On contrary in a partial award of 2000 in ICC case 10776, the tribunal disqualified a counsel, seemingly, considering that such action is in accordance
with the above mentioned principle. Quoted from: Naon G. Choice-of-Law Problems in International Commercial Arbitration, Recueil des cours de l’Acadmie de droit
international de La Haye, 2001, Vol. 289, p. 9, 158.
37. Waincymer, p. 610.
38. Lauterpacht H. Development of International Law by the International Court. London, 1958, p. 164.
41. Brower C.N., Schill S.W. Regulating Counsel Conduct before International Arbitral Tribunals. In: Bekker P.H.F., Dolzer R., Waibel M. Making Transnational Law Work
in the Global Economy: Essays in Honor of Detlev Vagts. Cambridge: University Press, 2010, p. 504.
42. In principle, parties can explicitly agree to empower the tribunal to disqualify counsel, thus solving the problem of tribunal’s competence at the outset. Moreover, a
parties’ agreement to apply IBA Guidelines will have the same effect, since Guideline 6 explicitly empowers the tribunal to disqualify counsel. However, if parties have not
agreed on application of IBA Guidelines, the tribunal cannot apply Guideline 6, unless it is otherwise competent to disqualify counsel. See, IBA Guidelines, Guideline 1;
Comments to Guidelines 1-3.
45. Cf., Ibid., p. 614. The reference to mandatory nature of the source of power to disqualify the counse, made by Waincymer, is crucial. If this power is derived from a
mandatory rule, then, presumably, such power cannot be abridged by a parties’ agreement. The author doubts whether parties can deprive a tribunal of its powers to
disqualify counsel, if the conflict of interest has been created intentionally to delay the proceedings. In such case, the parties would legitimize a bad faith conduct. However,
in cases where a counsel has joined procedure at the late stage, without any intention of the party to delay and obstruct the proceedings, there seems no grounds to
preclude an agreement that would deprive a tribunal from disqualifiyng counsel. Thus, the situation should not be viewed in black and white only.
46. Ibid., p. 616.
47. Ibid.
49. Ibid.
50. Ibid.
51. A partial award of 1997 in ICC case 8879. Quoted from: Naon G. Choice-of-Law Problems in International Commercial Arbitration, Recueil des cours de l’Acadmie de
droit international de La Haye, 2001, Vol. 289, p. 9, 158.
52. Naon G. Choice-of-Law Problems in International Commercial Arbitration, Recueil des cours de l’Acadmie de droit international de La Haye, 2001, Vol. 289, p. 9, 158.
53. Ibid.
55. Ibid.
56. Thus, a party that has missed an opportunity to challenge an arbitrator during a specific time frame loses such rights. See, Born, p. 1558.
57. It is beyond doubt that a legislator can deprive a tribunal of its right to disqualify counsel. As already described before, the author thinks, that the case is more subtle if
the agreement or institutional rules limit the rights of tribunal to disqualify counsel.
58. Born, pp. 1010-1012; McMullan S. Holding Counsel To Account in International Arbitration, Leiden Journal of International Law, June 2011, Vol. 24(2), p. 491, 509.
59. See, Waincymer, p. 613.
60. Ibid., p. 611.
61. Cf., Rompetrol, p. 11; Waincymer, p. 612.
63. Ibid.
64. Rompetrol, p. 9.
11 • YAR • APRIL 10, 2014
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Disqualification of Counsel in International Commercial Arbitration

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